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Current Market Outlook


Last week brought the long-awaited breakout by the major indexes, but after a couple of days at new high ground, most sank back into their prior five-plus-week ranges today; small-cap indexes even broke their 50-day lines. With that said, most indexes remain in good shape, and the same can be said about the vast majority of stocks (a bunch of which have gapped up on earnings) and sectors—in other words, the evidence remains far more positive than not. Because of that, it’s fine to take a swing at some strong stocks on pullbacks, especially those that have recently shown great accumulation. However, we’re going to leave our Market Monitor at level 7 today given the lack of progress in the indexes, and we’ll keep our eyes open should today’s selling persist.

The good news is that this week’s list is chock-full of earnings winners that should find support on weakness. Many look enticing, but our Top Pick is Skyworks (SWKS), which is one of many super-strong chip stocks that just enjoyed a big earnings gap as investors anticipate better results ahead.

Stock Name	Price	Buy Range	Loss Limit
Allegheny Technologies (ATI)	27.78	20-22	17.5-18.5
Broadcom Limited (AVGO)	266.26	196-202	182-185
Cheniere Energy (LNG)	63.82	46-48	42.5-43.5
Citizens Financial Group (CFG)	0.00	35-37	32-33
Eagle Materials Inc. (EXP)	0.00	103-106	96-98
International Paper Company (IP)	0.00	55-57	51.5-52.5
Micron Technology, Inc. (MU)	43.31	22.5-24	20.5-21
Royal Caribbean Cruises (RCL)	0.00	92-96	85-87
Seagate Technology (STX)	0.00	42.5-45	38-40
Skyworks Solutions (SWKS)	0.00	88-92.5	82-84

Current Market Outlook


The Nasdaq and leading growth stocks were whacked again last week, extending the correction in that group to just over three weeks. At this point, the major trend is still up, but intermediate-term, the onus is on the bulls, as many stocks (and the Nasdaq itself) have fallen toward key support—a couple of big selloffs from here would be a red flag, especially for names that have had big runs during the past year, though a strong sign of support could arrest the decline. Right now, we remain mostly bullish because many stocks are still in good shape, especially early-stage growth stocks that are trading resiliently and new leadership is emerging as money rotates into other areas.

This week’s list is a mix of both categories. Our Top Pick this week is Citigroup (C), which, despite its huge size, has great potential thanks to industry trends and recent news flow. The stock was the first big bank to leap to new highs recently, too.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	18-20	15-16.5
Citigroup Inc. (C)	0.00	66-68	63-64
Exelixis (EXEL)	27.35	23.5-25	21-21.5
iRhythm Technologies (IRTC)	51.15	41-43	37-38
Nintendo Co., Ltd. (NTDOY)	0.00	39.5-41.5	36-37
Packaging Corp (PKG)	0.00	108-111	101-103
Square, Inc. (SQ)	91.04	22-23.5	20-21
Teladoc, Inc. (TDOC)	127.95	32.5-34	29.5-31
Wayfair (W)	167.03	72-75	65-67
Winnebago (WGO)	48.56	34-35.5	31-32

Current Market Outlook


The market’s action last week—three days up and two days sideways in the S&P 500 and a run to new highs by the Nasdaq—looks excellent, and we think it’s time to put a little more of your sidelined cash to work. Yes, it’s a light-volume summer rally and earnings season will provide plenty of landmines to go along with the blastoffs, so we’re not advising going all in. But given last week’s early progress and stubborn refusal to give any of its advances back, we will bump our Market Monitor up by one step, putting it in the green. As always, we will listen to what the market tells us from here.

This week’s list has a couple of newcomers, including one of three Chinese stocks that have been making great strides. A few stocks with long Top Ten histories also made the grade. Our Top Pick is a Chinese retailer, JD.com (JD), that’s growing revenue at a blazing rate.

Stock Name	Price	Buy Range	Loss Limit
ASML Holding (ASML)	350.01	147-151	136-138
Huazhu Group (HTHT)	30.89	89-93	82-85
JD.com (JD)	39.58	41.5-43.5	38-39
JinkoSolar Holding (JKS)	0.00	26-27.5	24-25
Littelfuse (LFUS)	0.00	177-182	169-173
Netflix, Inc. (NFLX)	423.92	182-188	168-173
NRG Energy (NRG)	0.00	23.5-25	20.5-22
TD Ameritrade (AMTD)	0.00	45-46.5	42-43
Vertex Pharmaceuticals (VRTX)	230.36	152-160	140-145
Workday (WDAY)	194.88	101-104	93-95

Current Market Outlook


The S&P 500 and Nasdaq came into last week perched just under major resistance levels. But despite the prior run-up, weak opens on every day of the week and the poor jobs report on Friday, the market couldn’t pull back! Of course, the indexes still aren’t free and clear, and there are many uncertainties out there including the Fed’s next move and the upcoming EU vote in Britain, so we can’t rule out another retreat. But the market’s resilience thus far and the improved action from many leading stocks bodes well. We’re keeping our Market Monitor in bullish territory—a breakout on the upside (with many more stocks hitting new highs) would prompt us to lean toward a fully invested posture, while a dip of a few percent would have us paring back again.

This week’s list has many enticing selections, but we’ve selected an energy stock for our Top Pick. Continental Resources (CLR) has the acreage to crank out huge profits if oil prices creep higher, and the stock has tightened up nicely after a big run. Start with a small position and add to it as it rises.

Stock Name	Price	Buy Range	Loss Limit
Zendesk (ZEN)	82.19	24-26	23-23.5
Zillow (Z)	76.64	29-30.5	25-25.5
UnitedHealth Group Inc. (UNH)	0.00	133-136	125-126
Ulta Beauty (ULTA)	331.95	227-234	208-211
Tata Motors Limited (TTM)	0.00	32-34	29-30
Steel Dynamics (STLD)	0.00	24.5-25.5	22.5-23
Sanmina (SANM)	0.00	26-27	24-24.5
Continental Resources (CLR)	66.19	40.5-43	37-37.5
Big Lots (BIG)	43.12	50-53	46-47
Broadcom Limited (AVGO)	266.26	158-162	148-150

The market is ending the year a lot like it began it -- by going down, led mostly by growth stocks, and that’s keeping us defensive. We do think better times are ahead, and we even saw a positive broad market divergence this week as the Nasdaq retested its lows. But as has been the case all year, we’ll refrain from any major buying until the buyers truly show up.

Tonight’s issue talks about some puke action from individual investors (a good thing) and the fact that, after this bear ends, the market is likely set to resume its advance (not a long-term top), plus we fine tune our watch list (one name broke out today) and dive into some potential leaders, too.

Last but not least, all of us here wish you and yours a happy, healthy and prosperous 2023. Cheers to better times ahead!

The broad market pulled back 7% in the week after Fed Chair Jerome Powell’s Jackson Hole speech and small caps did a little worse, drifting as much as 10% lower as of Tuesday’s close. But the last couple of days have been better, setting up what could be a little relief rally next week.

Of course, the CPI numbers (to be released next Wednesday) will likely dictate broad market movement in the back half of the week (they should show continued moderating inflation).

Should the market resume its uptrend, we’ll look to put our cash to work, but tonight, with our Tides still negative, we’ll sit tight.

The iShares EM Fund has been trading effectively sideways since the middle of May, and that has kept the Emerging Markets Timer above its moving averages. We have one portfolio move tonight.

The iShares EM Fund has been trading mostly sideways since the middle of May, and that has kept the Emerging Markets Timer above its moving averages, but just barely. We have two portfolio moves tonight.

If market trends continue to improve, I’ll consider taking on more risk in the portfolio—but only if I think we’ll be well compensated for it. There are no ratings changes this week, and none of our stocks reported.

Few asset classes are benefitting from Covid-19 more than mortgage REITs. Here are two worth buying right now.

Not surprisingly, this week wasn’t a great one for our portfolio. I had a feeling the party was winding down last week, when we had an average gain of 105% going and had just seen our stocks pop an average of 6% over five days.

In this week’s video, Paul points out a few stocks that have created nice bases and a couple that have broken out to the upside.

In this week’s review, Mike discusses the three patterns he hunts for when looking for new buys and shares some of his top watch-list candidates.

It’s time to do a little buying. The market’s trends are still pointed down, so we still think going slow and stepping lightly makes sense. We are adding three new half positions to the portfolio tonight and keeping our cash position around 67%.

The bull market remains alive and well, and I continue to recommend that you be heavily invested in a diversified portfolio of stocks.

This week’s recommendation is a very small medical technology company focused on the business of processing and testing cells, as accurately and efficiently as possible. Long-term potential is big.



But to make room for it in the portfolio, something has to go, and this week it’s Digital Realty (DLR), which never really got going for us.



Full details in the issue.

With the marijuana sector being discounted, now is a good time to consider investing. Let’s examine all 8 marijuana ETFs, and the 3 I like.

Crista has several portfolio updates and changes today.

Six of our stocks reported earnings recently.